Default rate for Saudi Industrial Development Fund loans minimal

The Saudi Industrial Development Fund (SIDF) has approved more than 3,480 loans worth SR 106 billion for 2,475 projects, the SIDF chief has disclosed.

The Saudi Industrial Development Fund (SIDF) has approved more than 3,480 loans worth SR 106 billion for 2,475 projects, the SIDF chief has disclosed.

Director General of the SIDF Ali Al-‘Aid said the volume of nonperforming, or defaulting loans is estimated at SR 1.5 billion which represents only 1.5 percent of the total loans approved by the SIDF since its establishment.

This low defaulting percentage is considered significant by the standards of global financial institutions. The SIDF has always tried to settle problems related to defaulting issues, he was quoted as saying by the local media.

He said the government of Custodian of the Two Holy Mosques King Abdullah would never stop supporting the SIDF and provide it the necessary liquidity.

The SIDF chief cited a number of reasons for borrowers failing to repay outstanding loans including technical, business, administrative or financial.

The SIDF officials regularly visit projects under construction, and check financial reports if the project has already started production, to determine problems as early as possible, he said.

If a borrower defaults, the SIDF helps to reschedule or delay repayment until administrative or technical problems are solved. However, if the investor does not respond to the SIDF requirements to address the situation, legal action is taken, he said. This rarely happens, and only when all remedies are exhausted, he said.

He said loans approved for small-scale industrial projects has increased 75 percent. The number of beneficiaries of the Kafala Program, an affiliate of the SIDF, has steadily increased.

The Kafala Program is a collaboration between the Ministry of Finance, represented by the SIDF and Saudi banks, which aims to promote financing to small and medium enterprises (SME) within the Kingdom.

Every SR 1 billion invested in SME projects has generated at least 2,500 jobs for the Saudi youth. The number of approved loans to SMEs through the program jumped to 1,760 in 2012 compared to 50 in 2006, the year when the program was launched, he said.